CityTime Contractor Arrested on Bribe Charges

The former project manager for the lead contractor on New York City’s long-delayed, over-budget automated payroll system was arrested on charges of receiving more than $5 million in illegal kickbacks, federal authorities said Friday.

Gerard Denault, who was fired earlier this week from his position at Science Applications International Corp., the lead contractor on the project known as CityTime, was also charged with wire fraud conspiracy and money laundering conspiracy. Denault, 49 years old, was arrested Thursday in Danbury, Conn., where he lives, and is expected to be presented in Manhattan federal court on Friday.

His attorney, Barry Bohrer, said Denault will plead not guilty. “He is confident that a jury will find him not guilty of these charges,” Bohrer said.

In total, eight people have now been arrested in connection with the CityTime project; one defendant has died, and another has already pleaded guilty and agreed to help prosecutors with the case.

The cost of CityTime to New York taxpayers has ballooned to more than $700 million from initial estimates of $68 million. The project — and the allegations of criminal conduct — have been a major embarrassment to Mayor Michael Bloomberg, tarnishing his image as an expert manager.

Preet Bharara, U.S. Attorney for the southern district of New York, said in a statement that Denault accepted more than $5 million in kickbacks laundered through international shell companies, while steering more than $450 million worth of New York City funds to the technology company behind the kickbacks.

“It is deeply disturbing that while he was hired to help cut costs and save money, in reality, Gerard Denault was allegedly ripping city taxpayers off to pad his own pockets,” Bharara said.

Rose Gill Hearn, commissioner of the city’s Department of Investigation, which has been working with the federal authorities on the probe said, “This defendant sold his influence on the CityTime project, skimming millions for himself and leaving taxpayers to foot the bill.”

The complaint charges Denault with one count of honest services fraud conspiracy, one count of wire fraud conspiracy and one count of money laundering conspiracy. He faces a total maximum sentence of 60 years in prison and a maximum fine of $1 million or twice the gross gain or loss from the offenses, officials said.